Wednesday, September 03, 2008

Rising Income Inequality is Between Middle & Top

Perhaps for the first time since we’ve kept track of such things, higher-income folks work more hours than lower-wage earners do. Since 1980, the number of men in the bottom fifth of the income ladder who work long hours (over 49 hours per week) has dropped by half, according to a study by the economists Peter Kuhn and Fernando Lozano. But among the top fifth of earners, long weeks have increased by 80%.

This is a stunning moment in economic history: At one time we worked hard so that someday we (or our children) wouldn’t have to. Today, the more we earn, the more we work, since the opportunity cost of not working is all the greater (and since the higher we go, the more relatively deprived we feel).

In other words, when we get a raise, instead of using that hard-won money to buy “the good life,” we feel even more pressure to work since the shadow costs of not working are all the greater. We typically think of America’s income inequality, which has steadily increased since 1969 as a process in which the rich get richer and the poor get poorer. Surely, that should, if anything, make upper income earners able to relax.

But it turns out that the growing disparity is really between the middle and the top. If we divided the American population in half, we would find that those in the lower half have been pretty stable over the last few decades in terms of their incomes relative to one another. However, the top half has been stretching out like taffy. In fact, as we move up the ladder the rungs get spaced farther and farther apart.NYU Sociology Professor Dalton Conley in yesterday's NYTimesMP: Interesting explanation of rising income inequality - the higher income quintiles are getting richer because they're working harder, and the lower and middle income quintiles are doing about the same, even though they're less likely to work long hours.

7 Comments:

Is this trend by choice? How about workers who have to work part-time because they cannot get full-time work? Even for full-timers, I went from 3000 hours-per-year to 2000 hours-per-year since 2003. On the other hand, I do have time for my second and third jobs now; however, I don’t make up the pay that I lost from my day job.

I'm trying to stay away from the fault issue by just looking at numbers and not the reasons. Personally, I adapt to change well by building a marketable skill-set and shopping my abilities around.

I turn down a lot of freelance type work because I simply run out of time. The good-ole days were six-figure years, but times change. So goes life; I can't really complain. Life is good—especially considering the alternative.

There's another possible reason for this: People at the high end are much more likely to have interesting jobs that they love. No convenience store clerk is just dying to get behind the counter every morning and feeling sad when it's time to go at night.

> How many stories about a bad, rotten economy that was spawning homeless by the tens of thousands daily did we hear when Clinton was in office?

Very few, actually. The stories of which you recall were during the Reagan and Bush admins. The homeless stopped being in existence, apparently, during the Clinton years, only to Roar once again when Bush II took office.

Bernard Goldberg cites figures demonstrating this in either Arrogance or Bias, I forget which.